India auto retail sales up 34% in July as Covid-19 restrictions ease

Passenger vehicle sales rose by 63 per cent to 2,61,744 units last month, as compared to 1,60,681 units in July 2020.

Automobile retail sales in India came back strongly in July with the opening of dealerships across the country as COVID-led restrictions were eased in the affected states, dealers' body FADA said on Monday.

All vehicle segments, including passenger vehicles, two-wheelers and commercial vehicles reported robust sales growth last month.

Total sales saw an increase of 34 per cent to 15,56,777 units in July, as compared to 11,60,721 units in the same month of last year.

"With the entire country now open, July witnessed robust recovery in auto retails as demand across all categories remained high. Besides, the low base effect also continues to play its part," Federation of Automobile Dealers Associations (FADA) President Vinkesh Gulati said in a statement.

Passenger vehicle sales increased by 63 per cent to 2,61,744 units last month, as compared to 1,60,681 units in July 2020.

Gulati noted that the segment witnessed robust demand with buzz around new launches and compact SUV models.

However, long waiting periods due to supply-side constraints continue to persist for the last few months and are becoming a cause of concern for original equipment manufacturers (OEMs), he added.

Two-wheeler sales rose 28 per cent to 11,32,611 units last month, as against 8,87,937 units in July 2020.

"The two-wheeler segment continues to see positive demand year-on-year (YoY). However, the rate of recovery remains sluggish as customers at the bottom of the pyramid suffer with poor disposable income and rural markets where COVID cases were high during the second wave," Gulati noted.

Commercial vehicle retails grew over two-fold in July to 52,130 units, from 19,602 units in the same month last year.

Gulati noted that the segment is witnessing growth due to increase in demand especially in the medium and heavy commercial vehicles (M&HCV) segment with the government rolling out infrastructure projects in many parts of the country.

On the business outlook, he added that August has begun on a positive note as demand and enquiry levels continue to improve across all categories.

"With IMD forecasting a normal monsoon during the August-September period, sowing operations will pick up gradually. This will have a rub off effect on rural sales especially in the tractor segment," Gulati stated.

In July tractor sales grew by 7 per cent to 82,388 units, as against 77,257 units in July 2020.

Gulati stated that the semiconductor shortage issue is now becoming a deep-rooted problem for the passenger vehicle (PV) segment which is now above the pre-pandemic mark.

FADA has been raising red-flag since quite some time on demand-supply mis-match, he added.

"In an internal survey conducted by FADA, 60 per cent dealers in the PV segment said that they have at least two months waiting period for select variants. Similarly, 35 per cent dealers also said that the waiting period is more than four months for select variants," Gulati said.

Besides chip shortage, the delta variant of COVID if goes out of proportion can be another deterrent and put brakes on auto retail's recovery with India entering the festive season months, he noted.

FADA said it collected vehicle registration data from 1,305 out of the 1,519 regional transport offices (RTOs).

Founded in 1964, FADA, is the apex national body of the automobile retail industry in the country. It represents over 15,000 automobile dealers having 26,500 dealerships across India.